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Based on Iran's sixth development plan, the country's oil and gas industry requires an investment of about $200bn in the next five years to increase production. The Iranian government, to attract and motivate international oil company investment in their oil and gas fields, has presented a new type of risk service contract: the Iranian Petroleum Contract (IPC). This paper summarizes the features of the IPC and presents mathematical models of its fiscal regime for the benefit and guidance of both the National Iranian Oil Company (NIOC) and the contractors. Next, adopting bargaining game theory provides a mathematical model for reaching a win-win situation between the NIOC and the contractor. Finally, a numerical example is given and a sensitivity analysis performed to illustrate the implementation of the proposed models. The contractor and the NIOC may use these models when preparing their proposal and in the course of actual negotiations to calculate their internal rate of return, remuneration fee, and net present value for developing the fields at different conditions of their bargaining power, and derive a logical bargain to protect their best possible interests.

This paper studies the effect of state-owned enterprises (SOEs) on the dynamics of the Chinese urban labor market. Using longitudinally matched monthly panel data, we document very low labor force dynamics in the state sector, which leads to a high long-term unemployment rate. We develop and estimate an equilibrium search and matching model with three differences between the state and non-state sectors: labor productivity, labor adjustment cost, and workers’ bargaining power. Counterfactual analysis shows that, among the three channels, reducing the bargaining power of state sector workers is most effective in reducing unemployment duration and unemployment rate.

This study provides empirical evidence and develops a model that captures the complex intra-household bargaining interactions and gender-based intergenerational occupational mobility. Using panel data from Nigeria, our estimates show that greater intra-household female bargaining power leads to greater intergenerational occupational mobility for sons more than daughters. Similarly, the median age at first marriage has a positive impact on occupational mobility for both daughters and sons. However, benefit is larger for sons. In the model, parental gender bias is modeled as non-pecuniary (psychic) cost – a representation of parents’ pessimistic attitude towards their children’s adulthood outcomes – which negatively affects the marginal benefit of investing in children’s human capital. The decision of parents is critical in determining children’s mobility and becomes the basis of gender-based differences in human capital investment and intergenerational persistence.

We investigate a three-echelon supply chain in which a distributor at the middle echelon negotiates two wholesale price contracts with his upstream manufacturer and downstream retailer. In the first stage, the distributor decides on whether to first negotiate with the manufacturer or with the retailer; in the second (combined, noncooperative-cooperative, game) stage, the two negotiations are conducted sequentially. We find that the supply chain can be coordinated if the distributor first negotiates with the retailer. The distributor should choose the negotiation sequence for supply chain coordination, if he has a sufficiently large (small) relative bargaining power in the negotiation with the manufacturer (the retailer). We also extend our analysis to the cases in which the distributor and the manufacturer negotiate a buyback or two-part tariff contract, and draw similar outcomes when the distributor first negotiates with the retailer. In addition, under the two-part tariff contract, the distributor prefers to first negotiate with the retailer if the manufacturer has a sufficiently high disagreement payoff whereas, under the buyback contract, the distributor always prefers to first negotiate with the firm with a stronger bargaining power. Moreover, the two-part tariff (buyback) contract cannot (can) always coordinate the supply chain.

Employer-paid parking suffers from many weaknesses but is still widespread. This paper seeks to elaborate the line of reasoning accounting for the role of workplace parking and parking policy in the wage negotiation process, the income tax code, regulatory parking standards, and taking into account the adverse effects of parking at the workplace, parking elsewhere or not parking at all. We provide an assessment from two perspectives: firms provide parking spaces, a fringe benefit, if it is profitable to do so (market outcome); a social planner or policymaker endorses workplace parking if it is welfare-enhancing (social optimum). We find that policymakers as well as employers may lack sufficient incentive to reduce parking at the workplace, even in the presence of an employer parking policy program that pursues the goal of making parking opportunity cost visible to employees (parking cash-out). To foster a reduction of employer-paid parking and to exploit the potential welfare gains associated with employee-paid parking, we propose customized local cash-out programs at the firm level rather than uniform fringe benefit taxation enacted by the federal government, provided that cash-out levels account for local particularities (e.g. prevailing traffic conditions, co-existing transport policies), that bargaining power of workers over employers in terms of the incidence of cash-out is limited, and that cash-out as a wage supplement is not subject to income taxation. The (second-best) socially optimal cash-out level need not be identical to the opportunity resource cost of the employer-provided parking space.

This study examines whether the flow volatility experienced by institutional investors affects firms’ financing costs. Using Greenwood and Thesmar’s (2011) stock price fragility measure, we find that there is a positive relationship between fragility and firms’ costs of bank loans. This effect is most pronounced when lenders rely more on institutional shareholders to discipline corporate management, or when loans are made by relationship lenders, suggesting that unstable flows could weaken institutional investors’ monitoring effectiveness and strengthen relationship banks’ bargaining power.

Investment in technology improvement (TI) measures that reduce the consumption rate of input commodities (like fuel, energy, water, etc.) yields significant economic and sustainability benefits. Yet, evidence shows that the so-called holdup problem leads to inefficient levels of investment in TI. The suppliers refrain from investing in TI because they fear that a buyer with greater bargaining power will use TI-related cost reductions to push prices down—in the purchase bargaining process—and thereby further reduce the supplier’s profit margin. Conventional wisdom suggests that higher bargaining power on the buyer’s side aggravates this problem. In a two-tier supplier–buyer setting, we study the role of relative bargaining power along with technology uncertainty—i.e., the risk associated with investment return—on TI investment levels by the supplier. We challenge conventional wisdom to show that there is an inverse U-shaped relationship between buyer bargaining power and TI investment by the supplier and characterize how technology uncertainty moderates this relationship. We study and rank various contracting arrangements commonly used in industry, including the price commitment and shared investment contracts to remedy the investment inefficiencies resulting from the bargaining process.

We construct the network, centrality measures, and attributions of trading profits for a sample of CLS Bank settlement data that spans diverse currency pairs, participants, and execution platforms. We define an average centrality differential as the return to the more-central counterparty in the trade. Estimates imply that the more-central counterparty receives a higher return, and that this differential increases as the counterparties’ centralities diverge. These two results are consistent with a pervasive centrality premium. This premium may reflect bargaining power, but we also find evidence that the premium is partially offset by losses that central agents incur in supplying liquidity.

We investigate the effect of the provincial female-to-male wage gap on household educational expenditure for children in China. We find that an increase in the female-to-male wage ratio is positively associated with individual households’ educational investment in individual children, especially the out-of-school expenditures. The positive association is stronger for male children than for female children. Educational investment is more sensitive to a decrease in the gender wage gap among those with a higher educational level or a reduction in the gender wage gap within the informal sectors. However, educational investment is not sensitive to the gender differentials in the economic returns to education in the labour market. There is considerable heterogeneity in the effects of the gender wage gap across subsamples. Educational investments in children in senior high school, from medium- and low-income families, from urban areas and from families with only male children are more susceptible to a decrease in the gender wage gap. We also find that family income, economic growth and female bargaining power partially mediate the relationship between the gender wage gap and children's education expenditure.

We study a supply chain consisting of an upstream supplier who invests in innovation, which increases the value of products to users, and downstream manufacturers who sell to users. Analyzing a bargaining model, we find that the supplier should invest more in innovation under downstream competition than under a downstream monopoly if the supplier does not have strong bargaining power. However, if the supplier already has strong bargaining power, the supplier should make more innovation investment only if the downstream competition is relatively mild. Interestingly, we find that, if the supplier has strong bargaining power, intense competition between downstream manufacturers negatively impacts the supplier’s profit. Finally, we show that a stronger bargaining power may not always benefit manufacturers.

International audience; Under prospective payment schemes, hospitals may be disincentivised to use high-priced drugs. In this context, supplementary payment schemes have been implemented to fund hospitals beyond hospital tariffs for the use of such technologies. In France, since 2004, an add-on list scheme ensures that listed high-priced drugs are reimbursed by the state, thereby imposing no cost on hospitals while drugs are on the list. Yet little is known about the impact of drug delisting, i.e., when drugs are removed from the add-on list, on hospital utilisation. In this paper, we investigate the effects of delisting for 12 cancer drugs on the volumes prescribed, the generic shares and the purchase prices negotiated by hospitals. Using French hospital-level data over the period 2008-2016, we construct volumes, generic shares and purchase prices at the molecule level to account for potential substitutions across therapeutically equivalent drugs. Hospital fixed effects allow for time-invariant unobserved hospital heterogeneity linked to e.g., prescription preferences or hospitals’ bargaining power. Our results indicate that prescription volumes, generic shares and price levels are not systematically affected by delisting, nor do we find evidence of response heterogeneity by hospital type. Overall, our findings mitigate concerns that the financial incentives associated with add-on lists may lead to hospitals over-prescribing high-priced drugs.

In a homogenous good industry in which firms choose their cost-reducing R&D investments and make merger proposals prior to competing a la Cournot, we identify conditions under which there are coalition-proof Nash equilibria involving horizontal mergers as well as non-integration. Mergers arise whenever the R&D technology is sufficiently effective. Moreover, if firms’ R&D investments are substitutes (complements) and the bargaining power is unevenly (evenly) distributed among merger participants, a merger is the unique coalition-proof Nash equilibrium. Antitrust policy guidelines are simple when the welfare standard is the consumer surplus and R&D investments are substitutes, but are more complex when the standard is total surplus and/or R&D investments are complements.

China is now facing the challenges of high leverage. Our study has examined the role of firms’ rising debt in explaining the decrease in labor share in recent years. We developed a model to show that firms may strategically use debt to increase their bargaining power, resulting in lower labor share. Empirical evidence shows the labor share is robustly negatively related to debt per worker, and the negative correlation varies across ownership, labor union and maturity of debt. The findings imply that the de-leveraging policy may help alleviate the worsening income inequality.

The objective of this paper is to investigate the nexus between the labor share and globalization in transition economies, with a reference to the skill intensity. We put these developments in the context of the structural and reform developments in transition economies. We rely on the predictions of the efficient bargaining model, whereby globalization forces are set to affect workers’ market bargaining power, which then produces certain developments in the labor share. We use industry-level data for 23 transition economies of Central and Southeast Europe and the Commonwealth of Independent States over the late transition period of 2000–2015. Results robustly suggest that globalization forces played important role for the stagnant labor shares in transition economies, mainly in low-skill industries. Workers’ shares in high-skill industries largely remained intact. Results further suggest that the negative effect has been the strongest for the low-skilled workers in the early transition phase and then lessened or vanished as countries turned a higher development stage. The key finding advises that if governments of transition countries attempted to or undertook steps to seize globalization by offering ‘cheap labor’, then it has been the wrong strategy.

Reports of the literature documenting the declining labor share of income have increased greatly in the past few years, which is opposed to one of the famous “Kaldor's stylized facts” of growth. The declining labor income share has been observed since the 1980s in a number of countries, and especially in the United States. Recent studies have revealed the following five major driving forces of the declining labor share: (i) supercycles and boom-busts, (ii) rising and faster depreciation, (iii) superstar effects and consolidation, (iv) capital substitution and automation, and (v) globalization and labor bargaining power. We set up a two-sector optimal growth model with the R&D intermediate sectors producing intangible capital. By integrating driving factors (ii) through (iv) above into the model, we demonstrate the long-run decline of the aggregated labor income share.

This paper uses multi-country, firm-level data covering 109 countries for the period 2005 to 2017, to examine the effects of bribery on export decisions for firms facing institutional constraints. Bribery consists of “greasing” and rent-seeking behavior. Firms’ self-evaluations of the extent of obstacles affecting their business operations, including corruption, political instability, tax administration, and business license regulations, were used to capture the institutional constraints. Our empirical results provide evidence to support the “greasing-the-wheels-of-trade” hypothesis. The positive effect of greasing bribery is particularly sizable for large-sized firms or those facing no institutional constraints. In other words, firms with strong bargaining power proxied by firm size obtain more benefits from paying bribes if there are no institutional constraints; thus, they are more likely to export. These results hold when we specify almost all types of institutional constraints except for political instability. Lastly, when the endogeneity problem is controlled, the effect of greasing bribery becomes pronounced.

The cultural practice of bride kidnapping in Kyrgyzstan may alter the returns to education for young women in an ambiguous direction due to two competing effects. On the one hand, women facing a risk of kidnapping may reduce education investment due to uncertain returns. Alternatively, since kidnapping is less likely to occur while a woman is in school, women may increase education investment to lower their personal risk of being kidnapped into marriage. Understanding how education is affected by kidnapping risk allows us to better anticipate changes in education when the laws are enforced and the risk declines. We develop a two-period utility model to highlight the effects of kidnapping risk on education and to help identify those girls who are most likely to increase their education when faced with positive regional kidnapping risk and thus most likely to reduce education if the risk is eliminated. We test the implications of the theory empirically using the Life in Kyrgyzstan data. Difference-in-difference regression results point to a negative relationship between regional kidnapping rates and education, suggesting that the elimination of kidnapping is likely to induce higher education rates of women in Kyrgyzstan. The results are informative to the literature at the intersection of marriage traditions, women's bargaining power and education attainment.

In this paper, a model of endogenous economic growth is developed with special focus on the interaction between unionized labour market and environmental pollution. We introduce a trade union; and use both ‘Efficient Bargaining’ model and ‘Right to Manage’ model to solve the negotiation problem. Environmental pollution is the result of production; and the labour union bargains not only for wage and employment but also for the protection of environment. We derive properties of optimum income tax policy while financing abatement expenditure; and also analyse the effects of unionization on the level of employment and on growth rate. It appears that the optimum rate of income tax varies inversely with the relative bargaining power of the labour union. An increase in the relative bargaining power of the labour union may enhance employment in ‘Efficient Bargaining’ model if the labour union is highly employment oriented. However, the union always forces the firm to raise the spending rate for environment protection. So, unionisation may raise the growth rate, even if the first effect is negative, but the second effect dominates the first effect.

We consider a standard private value ascending-bid auction and show that subsequent negotiations make a seller worse off. The reason is that the seller’s optimal strategy does not change if she can make a take-it-or-leave-it offer to the highest bidder after the auction. Consequently, her expected revenues do not increase with subsequent negotiations, but decrease if the highest bidder has some bargaining power.

Products often bundle together many functions, e.g., smartphones. The firm develops the big idea (which functions to bundle) and then chooses one supplier per function. We assume there is a holdup problem and prove that the firm’s bargaining power (Shapley value) is declining in the number of suppliers. Greater scope as measured by the number of suppliers exacerbates holdup, but this can be partially offset by the appropriate choice of vertical integration or outsourcing. Our main result flows from the empirical observation that the number of functions varies across products within an industry (firm heterogeneity). We introduce the notion of an ‘ideas-oriented’ industry as one in which more productive firms have higher marginal returns to introducing a new function. This leads to two testable hypotheses. More productive firms will (1) have more suppliers and (2) be more likely to integrate those suppliers. We take this to the data by training a multilayer perceptron to predict whether or not each of 29 million PATSTAT patent applications involves new/improved functions. We merge these patents with S&P Capital IQ data on 55,000 companies and their supplier networks. We show that in industries where patents are skewed towards new or improved functions, more productive firms have more suppliers and are more likely to integrate these suppliers.

We analyze the effect of game modes and investment cost locations on firms’ profits and their incentives to adopt Radio-Frequency Identification (RFID) technology. We consider a supply chain, where one manufacturer places an RFID tag on each item and sells through one retailer. The two firms can play the Stackelberg game or the Bargaining game. Specifically, under the Stackelberg game, the manufacturer dictates the wholesale price first (M) or the retailer moves first to announce the retail markup (R); under the Bargaining game, firms can bargain over the wholesale price only (O) or over both the wholesale price and quantity (B). Adopting RFID incurs both a variable cost and a fixed cost, which can be borne by the manufacturer or the retailer, respectively. Our results show that under B, whether the retailer or the manufacturer bears the fixed cost does not affect both firms’ profits. Surprisingly, under O, we observe that the retailer earns more when he bears the fixed cost than when he does not if his bargaining power is strong. Although the chain under B is perfectly coordinated, the retailer gains more under B than under O only when his bargaining power is strong. Furthermore, the retailer's incentive to adopt RFID is stronger under R than under M, and his highest affordable variable cost is higher than the manufacturer's when the fixed cost is ignored under R. Finally, both firms’ highest affordable fixed costs under R are higher than the centralized level when the variable cost is high.

Since the early 1990s, heavy state intervention in the extractives sector—or resource nationalism—has become more common in resource-rich lower income countries. This article considers what domestic and global conditions in the political economy of extractives account for the resurgence of resource nationalism in Indonesia despite the risks to foreign investment, including who benefits and how. We examine Indonesia's regulatory reforms and analyse the intersections between global and domestic dynamics that have resulted in Indonesia taking a majority ownership share of Freeport Indonesia. We contend that within long-duree Cycles of Resource Nationalism, the geospatial concentration of minerals in maturing industries has given more bargaining power to Indonesia vis-a-vis foreign investors. However, we argue the specific timing and scope of resource nationalism in Indonesia has been contingent on the conditions in particular sectors of the domestic political economy and the ways that foreign investors and the domestic elites have reconfigured their goals to be mutually compatible. In democratising contexts, resource nationalism provides a discursive rubric by which elites can garner support and legitimacy to reorganise the underlying ‘extractive’ political settlement, within which foreign investors can influence elite incentives but less so the deeper configuration of power relations.

In view of the fact that minimum charge and premium budget constraints are natural economic considerations in any risk-transfer between the insurance buyer and seller, this paper revisits the optimal insurance contract design problem in terms of Pareto optimality with imposing these practical constraints. Pareto optimal insurance contracts, with indemnity schedule and premium payment, are solved in the cases when the risk preferences of the buyer and seller are given by Value-at-Risk or Tail Value-at-Risk. The effect of our constraints and the relative bargaining powers of the buyer and seller on the Pareto optimal insurance contracts are highlighted. Numerical experiments are employed to further examine these effects for some given risk preferences.

Motivated by the revolution brought by the internet and communication technology in daily life, this paper examines how the online travel agencies (OTA) can use these technologies to improve customer value. We consider the design of a fixed number of package tours offered to customers in the digital travel industry. This can be formulated as a Team Orienteering Problem (TOP) with restrictions on budget and time. Different from the classical TOP, our work is the first one to introduce controlled diversity between tours. This enables the OTA to offer tourists a diversified portfolio of tour packages for a given period of time, each potential customer choosing a single tour in the selected set, rather than multiple independent tours over several periods as in the classical TOP. Tuning the similarity parameter between tours enables to manage the trade-off between individual preferences in consumers’ choices and economies of scale in agencies’ bargaining power. We propose compact and extended formulations and solve the master problem by a branch-and-price method, and an alternative branch-cut-and-price method. The latter uses a delayed dominance rule in the shortest path pricing problem solved by dynamic programming. Our methods are tested over benchmark TOP instances of the literature, and a real dataset collected from a Chinese OTA. We explore the impact of tours diversity on all stakeholders, and assess the computational performance of various approaches.

This paper studies the interplay between wage gap and government spending in a small open economy facing a shock in trade policy. We consider a specific factor model with an export sector, which uses skilled labour, and an import-competing sector, which uses unskilled labour. We find the conditions under which there exists an inverse (direct) relation between trade liberalization (protection), which increases (decreases) the skilled-unskilled wage gap, and the level of government expenditure. We also show how either an unbalanced distribution of political bargaining power, or tariff revenue co-financing public spending may break this inverse relation. Moreover, the direct relation between tariff protection and public goods provision can be strenghtened by progressive taxation and weakened by regressive taxation.

We show that firms with illiquid stock have higher syndicated loan spreads. This result is invariant to measurement of stock illiquidity, and is robust to a wide set of cross-sectional loan and firm features, firm and time fixed effects. It also holds using a matched difference-in-differences estimator, at an exogenous reduction in the minimum tick size of major United States exchanges, and using a two-stage least squares estimator. Stock illiquidity is shown to increase spreads more when a lead lender has a high market share or a borrower has a low credit rating. It increases spreads less when a borrower has public rated debt and it diminishes the benefit to the loan recipient of a lending relationship. Measurements of stock price informativeness and firm-level governance do not affect the stock illiquidity and loan spread relation. A rationale for these findings is that stock illiquidity impairs the bargaining power of corporate borrowers, in negotiating a loan rate, as it raises the cost of alternatively raising funds by issuing equity.

This paper extends the traditional two-player noncooperative bargaining game by adding a recommendation stage before the regular bargaining stage. At the recommendation stage, a coordinator recommends a feasible payoff pair to the players. If both players accept the recommendation, the game ends and the recommendation is enforced. Otherwise, the game enters the bargaining stage, where each player is picked as the proposer of any bargaining round according to an exogenous probability characterizing their relative bargaining power, and both players receive their respective reservation payoffs with a certain risk of breakdown if they fail to reach an agreement in this round. We characterize the unique subgame perfect equilibrium outcome of this extended game. The equilibrium recommendation, which will be accepted by both players, is optimal for the coordinator among all acceptable recommendations. A player’s payoff in optimal recommendation increases with her bargaining power. As the risk of breakdown vanishes, the optimal recommendation converges to an asymmetric Nash bargaining solution parameterized by the probability at the bargaining stage.

High supplier concentration (SC) of a firm can weaken the firm’s bargaining power, which reduces its profitability and internal funds. Also, high SC likely increases the firm’s exposure to supply shocks, which results in high costs of external financing. Consequently, high-SC firms will incline to hold more cash due to the precautionary concern. However, there is little research into the effect of SC on cash holdings. This paper investigates how SC affects cash holdings with Chinese firms over 2009–2016. We find that a firm’s cash holding increases with its SC. Further investigations show that this positive relation stems from the unfavorable impact of SC on trade credit and equity financing. Our results are robust to different tests including the instrumental variable approach and the propensity score matching. Our findings are new to the literature and help to explain the cash holding puzzle. Our study also indicates that choosing supplier concentration adequately is important in maintaining a firm’s financial health.

We analyze the economic and financial impact of right-to-work (RTW) laws in the US. Using data from collective bargaining agreements, we show that there is a decrease in wages for unionized workers after RTW laws. Firms increase investment and employment but reduce financial leverage. Labor-intensive firms experience higher profits and labor-to-asset ratios. Dividends and executive compensation also increase post-RTW. Our results are consistent with a canonical theory of the firm augmented with an exogenous bargaining power of labor and suggest that RTW laws impact corporate policies by decreasing that bargaining power.

In designing a contract with an agent privately informed about its cost, should a principal consult an expert who has already received a partially informative signal of the agent's cost? The expert has a prior relationship with the agent, facilitating (weak) ex ante collusion which coordinates their participation and reporting decisions with accompanying side-payments. While delegating contracting with the agent to the expert is never profitable, we show that consulting the expert is typically valuable. Changes in bargaining power within the coalition have no effect, while altruism of the expert towards the agent makes the principal worse off.

This paper studies how information design, via public disclosure of past trade details, affects price discovery in a dynamic market. We model that an informed forward-looking buyer sequentially trades with a series of uninformed sellers (hedgers) with heterogenous hedging motives. We discover that sellers' price discovery over the underlying hidden fundamentals is crucially affected by what they can observe about past trade details. Specifically, (i) the availability of past trade details, paradoxically, makes it easier for the informed party to hide her private information and offer opaque prices. (ii) Post-trade price transparency delays price discovery, but once it happens, it is always perfect. (iii) In contrast, when only past order information is available, price discovery can never be perfect, and can even be in the wrong direction. Finally, we show that our findings are robust for diminishing bargaining power, non-zero outside options, and different trading positions.

Suppliers are concerned about the extent of customer concentration, which creates supplier’s operating efficiency (benefit) as well as major customer’s bargaining power (cost). When these suppliers are SMEs with resource deficiency, they are more concerned with how to balance this trade-off. Regarding the problem, we study the relationship between customer concentration and supplier profitability and the moderating role of insider ownership, the fraction of equity owned by firm’s insiders, on the relationship. We find that concentration by major customers has a U-shaped relationship with supplier profitability, and this relationship is attenuated as insider ownership increases. This implies that insider ownership can attenuate the bargaining power of major customers and strengthen the operating efficiency of suppliers. Our findings provide relevant evidence on the costs and benefits of concentration by major customers as well as theorize the moderating role of insider ownership from the perspectives of interest alignment and collaborative relationship marketing.

This article studies the growth of the Spanish economy during 1957–1975, known as the period of Francoist developmentalism or the Technocratic Stage of Francoism. We aim to contribute to an explanation of the intense growth in domestic demand and investment that occurred during that time, which remains unstudied despite many analyses of the “Spanish economic miracle”. Following Bhaduri & Marglin’s models, our main thesis holds that an increase in the wage share, resulting from the greater bargaining power of workers, had a positive effect on growth, productivity, and investment; we suggest the existence of a wage-led model, including feedback effects that such a model of growth entails. This hypothesis is tested, and confirmed, using a Vector Autoregressive (VAR) model.

I explore the prevalence of exchanges of innovation resources inside venture capital portfolios. I show that after companies join investors’ portfolios, several proxies of exchanges between them and portfolio companies (relative to matched nonportfolio companies) increase by an average of 60%. The increase holds when joining events are plausibly exogenous and when VCs’ bargaining power and potential conflicts of interest are low. Three novel mechanisms are supported: carve-outs, spawning, and recycling, whereby entrepreneurs divest innovation units, start new ventures, and reuse assets in other portfolio companies, respectively. Results suggest that returns to innovation are higher in venture capital portfolios.

This paper incorporates the role of an independently growing autonomous demand component into a neo-Kaleckian model of growth and distribution where the distribution of income is fully endogenized. A peculiar feature of these autonomous expenditures is that in contrast to investment they are non-capacity creating. The model presents the combined dynamic effects of a conflicting-claims theory of inflation, the Sraffian supermultiplier, the Harrodian instability mechanism and mechanisms based on a reserve army of labor effects. The key features of the model include the convergence towards a long-run steady state where the normal rate of utilization of capacity is being attained and where stable rates of employment and inflation are being achieved. Despite the achievement of a fully-adjusted position, the model vindicates some of the main Keynesian or Kaleckian tenets, in the sense that both the average rates of capital accumulation and capacity utilization decrease during the whole traverse after either an increase in the marginal propensity to save out of profits, an upward adjustment in the claims on profits, or an enhancement of the bargaining power of firms relative to workers.

This study examines the optimal income taxation for a two-earner household, where the couple bargains over their private goods consumption and time allocation between work and leisure. In the model, bargaining power is determined endogenously by the income gap between the two earners. Conventional studies have shown that the higher income tax rate should be imposed on the individual with the smaller wage elasticity, typically the individual with the higher productivity. In contrast to conventional argument, this study shows that the optimal tax rate on the household member with the higher productivity is lower than that of the individual with the lower productivity if the required tax revenue is relatively small and the influence of the gender income gap on the power balance of the couple is moderate. This is because such a tax structure encourages the labor supply of the individual with the higher productivity to mitigate the decrease in the household’s consumption induced by income taxation.

We use a large housing transaction data set in Singapore to study whether real estate agents use information advantages to buy houses at bargain prices. Agents bought their own houses at prices that are 2.54% lower than comparable houses bought by other buyers. Consistent with information asymmetries, agent buyers have more information advantages in less informative environments, and agent buyers are more likely to buy houses from agent sellers. Agent discounts are from both “cherry picking” and bargaining power, and bargaining power contributes more to the agent discounts. Agents’ advantage consists in their information of available houses and previous purchase prices.

Forward contracts are one of the prevalent and useful tools for managing the risks associated with the volatility of the electricity market prices. Forward contracts and day-ahead electricity market are executed simultaneously, and hence, they affect each other. This paper proposes a comprehensive supply function equilibrium model to consider the mutual interactions between forward contracts and the associated day-ahead electricity market in a power system. Negotiation between each producer and consumer in forward market is taken into account in the model. In order to consider the risk management behaviors of all market players in the model, a new risk management method is presented. The proposed risk management method takes into account the concerns of market players about the future prices of day-ahead market over the delivery period. The model proposed in this paper is applied to a test system with forward and day-ahead markets. The results are compared with the case that there is no forward contract in the power system. Impacts of growing the concerns of producers and consumers about the future, impacts of increasing demand uncertainty, impacts of improving bargaining power of consumers in contracting period and impact of contracting obligations for producers on the simulation results are discussed. The proposed risk management method is compared with CVaR method and its efficiency is evaluated. Finally, applicability of the proposed model to real size power systems is examined.

Using federal contractor data, this paper examines the political costs hypothesis through the impact of government scrutiny and political sensitivity on executive compensation. The political cost hypothesis proffers that firms subject to government scrutiny take actions to deflect potential negative government reactions which can result in increased political costs for the firm. Results suggest that government contractor firms with the most political sensitivity (i.e., firms with government contracts that are most visible and comprise significant portions of their revenue) are associated with lower total (and excess) compensation to their CEOs, but with larger portions of cash, leading to lower long-term CEO wealth performance sensitivity. However, politically sensitive contractors with significant bargaining power (due to concentration, competition, or political contributions), are actually associated with greater excess compensation than other politically sensitive firms. These findings provide insight into the effects and limitations of additional government monitoring of executive compensation.

In past experiments involving a wide range of bargaining settings, individuals exploited their bargaining position less fully than standard theory predicts. Typically, these experiments allocated bargaining position randomly, so that bargainers, viewing their position as unearned, may have been reluctant to fully exploit it. We investigate the impact of earned bargaining power using theory and experiment. In our “Earned” treatment, disagreement payoffs – and hence bargaining power – are based on performance on a real–effort task. In our “Assigned” treatment, subjects perform the task but disagreement payoffs are randomly assigned. Our “Notask” treatment is like the Assigned treatment but without the task. Comparison of our Earned and Assigned treatments provides our main result: subjects are more responsive to changes in bargaining position when it is earned. Responsiveness is also often higher in our Assigned treatment than in our Notask treatment – suggesting a possible effect of merely including a status–irrelevant task – though these differences are usually insignificant.

Despite the increasing popularity and growth of online second-hand peer to peer/customer to customer (P2P/C2C) e-commerce, research on online second-hand shopping remains limited. To fill the research gap, this study conceptualizes, develops, and validates a scale to measure online second-hand shopping motivation (OSSM). The findings show that OSSM, as a formative higher-order construct, consists of three second-order factors and nine first-order dimensions: economic motivation (including price orientation, bargaining power, and critical orientation), convenience motivation (usefulness and ease of use), and ideological motivation (need to be unique, nostalgia, trust, and assurances). Further, the study results reveal that OSSM positively predicts attitude and repurchase intention. This study has important implications to the online P2P second-hand firms and the new goods e-retailers.

There is strong evidence that employees’ motivation and incentives in the workplace are affected by vertical pay comparisons. In a stylized Cournot duopoly model with firm–specific unions that institutionalize workers’ vertical fairness concerns, we show that universal wage employment (w,e)–bargaining may arise as the equilibrium scope of bargaining institution. We thus propose that intra–firm vertical fairness concerns may resolve the mismatch between recent findings in the empirical literature on labor market institutions and the predictions of traditional models that universal (w,e)–bargaining will never arise in equilibrium (the “Scope of Bargaining Puzzle”). We derive a number of testable hypotheses that address the recent shift towards more decentralized bargaining institutions, the decline in unions’ bargaining power, and the prevalence of (w,e)–bargaining.

Credit default swaps (CDSs) can create empty creditors who potentially force borrowers into inefficient bankruptcy but also reduce shareholders’ incentives to default strategically. We show theoretically and empirically that the presence and the effects of empty creditors on firm outcomes depend on the distribution of bargaining power among claimholders. If creditors would face powerful shareholders in debt renegotiation, firms are more likely to face the empty creditor problem. The empirical evidence confirms that more CDS insurance is written on firms with strong shareholders and that CDSs increase the bankruptcy risk of these same firms. The ensuing effect on firm value is negative.

We examined intrahousehold decision making with respect to household investment in portfolios of future rice varietal trait improvements (VTIs) to increase farm households' livelihoods in Nueva Ecija, Philippines. Investment decisions were elicited using an experimental methodology based on investment games. In the investment game, couples from rice farming households were given the opportunity to invest in public rice breeding. They selected, first individually, and then jointly, a replacement rice variety to improve upon and were then asked to allocate a research endowment fund to a portfolio of VTIs. We developed a novel indicator of women's intrahousehold decision-making power (WIDMP) based on the relative Euclidean distances between the individual and joint VTI portfolios. We found that WIDMP is normally distributed; and that, on average, women had almost equal (48%) decision-making power as men (52%), revealing almost perfect gender equity in investment decision making in rice breeding. Women were slightly more empowered if they were engaged in off-farm employment and were less experienced in farming. More empowered women had a higher discount factor and based their investment decisions on anticipated future trends, rather than current or past experience. The findings not only highlight the importance of considering gender roles in technology design, adoption and extension programs, but also have broader implications in terms of women empowerment programs. Consistent with the Sustainable Development Goals (SDGs), our evidence suggests that education and training programs need to be paired with investments generating off-farm employment opportunities to effectively increase women's bargaining power in the household., Highlights • We develop a novel indicator of women's intrahousehold decision-making power. • Filipino rice farms exhibit high gender equity in investment decision making in rice breeding. • Off-farm employment empowers women in investment decision making in rice breeding. • More empowered women base their investment decisions on anticipated future trends.

Contract farming (CF) is always and inherently a gendered process. This paper unveils the gender dynamics in resource access, use and labour control to show how outgrower CF induces changes, often contradictory engendering processes of production relations. It asks: How does CF influence gender relations in access to land, household labour relations and employment conditions (participation)? Relying on a detailed case study research of a sugarcane CF scheme in Malawi, we show that CF has a complex gendered impact on household’s production relations. CF leads to a masculinization of farm management and ownership together with a feminization of labour. Nevertheless, women translate such labour provision into active participation in decision-making over the use of the cash returns from the CF for better outcome in the household. At the individual level, some can benefit from it; especially women who manage to engage in cane farming are able to attain financial independence and increase their bargaining power within their households. However, such benefits are reserved for households with access to land. Nevertheless, women engagement in cane farming coupled with increased gender awareness through NGOs sensitization is contributing to a change in gendered social perceptions and increased valuation of women abilities in commercial farming, their needs and contributions and may be modifying the gender balance at the community level. We demonstrate that empowering women by making them cane farmers alone is not enough to change women position within their communities, unless community members accompany such empowerment with the recognition and acknowledgement of the women’s contribution. The finding suggests that combining active women participation in outgrower CF with authority enhancing programs through community education whilst creating the possibilities for women to take independent action may be a good way to improve the gender relations between men and women.

This paper investigates the spatial dimension of power relations and the shaping of local alliances through a hydropower development project in Nepal. It provides a grass-roots illustration on the role of space in shaping and reshaping power relations, and how it manifests in the formation of local strategic alliances. Taking the Upper Karnali hydropower project as a case study, the paper highlights: 1) the role of private sector actor as an ad-hoc decision maker in hydropower development in the country; 2) how hydropower development is perceived by those who will be most affected; and 3) how the two shape the localized dynamics in hydropower decision making, while also sheds light on some of the key gaps in hydropower decision-making landscape and processes. Viewing space as a process and a product of socio-political interface, it shows how local communities living along the Karnali River view the planned hydropower project differently, how these views are rooted in their relationship with the hydropower company, and how such relationship is predetermined by local communities’ bargaining power in relation to the proximity of their respective villages to the planned hydropower dam site, and vice versa. Unpacking the power relations shaping and reshaping spatial politics in hydropower decision making, it presents the concept of spatial alliances as a theoretical underpinning to unpack the question on why and how power relations emerge, are sustained and reproduced.

This article analyzes how a licensor's market value varies at the time that it announces a licensing agreement. It posits that licensors’ appropriation capacity is a function of their bargaining power (determined by their financial situation and information asymmetries when signing the contract) and the potential cost of imitation that the licensors face (determined by their position in the sector). As bargaining power in each situation should determine licensors’ success, it also should enhance their appropriation capacity in terms of market value. However, the cost of imitation should have a negative effect on licensors’ appropriation capacity. This study shows that companies with cash constraints appropriate fewer benefits from licensing than do companies that have a ready cash flow (0.87% vs. 2.84%). If companies license out under low information asymmetries (same sector), they also appropriate more benefits from licensing than do companies facing high information asymmetries (different sector) (7.27% vs. 1.53%). Finally, licensors that are leaders appropriate fewer benefits than those that are followers (0.61% vs. 3.86%).

A profit-maximizing public good supplier endogenously determines the level of the public good and simultaneously negotiates with beneficiaries of the good one by one. A pre-negotiation commitment on the production level of the public good by the supplier enhances the internalization of beneficiaries' preferences. With the commitment, the supplier produces the public good at an efficient level in equilibrium if and only if its bargaining power is sufficiently weak. In addition, the public good is produced excessively as a result of the commitment when the supplier's bargaining power is sufficiently strong.

We model asset issuance in over-the-counter markets. Investors buy newly issued assets in a primary market and trade existing assets in a secondary market, where trade in both markets is over-the-counter (OTC). We show that the level of asset issuance and its efficiency depend on how investors split the surplus in secondary market trade. If buyers get most of the surplus, then sellers do not have incentives to participate in the primary market in order to intermediate assets and the economy has a low level of assets. On the other hand, if sellers get most of the surplus, buyers have strong incentives to participate in the primary market and the economy has a high level of assets. The decentralized equilibrium is inefficient for any splitting rule. The result follows from a double-sided hold-up problem in which it is impossible for all investors to take into account the full social value of an asset when trading. We propose a tax/subsidy scheme and show how it restores efficiency. We also extend the model in several dimensions and study the robustness of the inefficiency result. Finally, we explore the effects of the inefficiency using numerical examples. We study how bargaining power and trading speed in the secondary market affect the efficiency result, and we notice some interesting implications for policy interventions aimed to restore efficiency to OTC markets.

We examine a license contract in a vertically separated market in the presence of a competitor’s challenge and information asymmetry. When technology’s value is not observable, innovators with more valuable technology disclose their private information to receive a fair payment despite a rival’s earlier challenge, whereas the owner of less valuable technology reveals nothing. We show that the more valuable technology is and the less bargaining power the innovator has, the more information the innovator discloses. This finding is consistent with empirical evidence on inventors’ disclosure strategy after the American Inventors Protection Act (AIPA). Furthermore, we show that despite the information disclosure, innovators make R&D investment earlier than they would have under symmetric information. This is in contrast with conventional wisdom that the need to disclose complementary information may retard innovation, and can be explained by the interaction between the decisions of investment timing and information disclosure. Though the leading innovator suffers losses from information asymmetry, the total value of the firms in the market may increase due to the diffusion of knowledge.